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Why don't retailers of luxury durable goods use dynamic pricing? Surely Best Buy would love to charge the actual market price (~$800 from a quick eBay search) f
by cbdumas 5y ago
Why don't retailers of luxury durable goods use dynamic pricing? Surely Best Buy would love to charge the actual market price (~$800 from a quick eBay search) for a PS5. Sony could just auction batches of consoles to retailers and let them price / promote however they want. Instead they stick to MSRP, leading to shortages at retailers and leaving lots of money on the table for resellers. I don't get it.
- secabeen 5y agoBecause Sony wants the official retail price to be $X. If you get an allocation from Sony, and then sell at $x+300, you won't get any more allocation.
- HWR_14 5y agoBecause that nets Sony an extra $150/unit (assuming Best Buy pays 1/2 the unit price). But Sony's customers feel cheated. Customers can handle not getting a unit via a "fair" practice, but they resent the rich explicitly getting better treatment for things like that. Also, they cannot plan a budget. Right now, if you have $500 you have a PS5 eventually. In your world, they buy an Xbox or spend it on something else because they don't want to keep saving and getting priced out. But keep in mind consoles are all network effects, and the real money is on subscriptions and commissions on games. So, Sony gets a one time pop in revenue, fewer units lead to fewer exclusives, leads to more people selecting XBox in the future. I think MS was willing to lose a billion on the first Xbox to get sufficient traction. If we discount inflation entirely and assume that was a reasonable value, Sony would have to sell 6.67 million units to be equal to the cost of losing a console war. And they could always end up pulling a Sega.